A rising commodity price does wonders to the outlook for producers, be they iron ore producers, gold miners or copper companies.
We have seen Rio Tinto, for example, upgrade its Western Australian iron ore reserves and we should be watching the clutch of copper companies as a $US4 a pound world price increases the viability of more mines and prospects here and offshore.
But it’s been gold where the impact has been greatest, and with the metal hitting a new intra high of over $US1,429 an ounce overnight Monday, a lot of gold projects, current and prospective, are looking better.
And we got a good example of that yesterday with Newcrest confirming a big upgrade in output is in sight, thanks to its merger with Lihir Gold mid year and the rising world price.
Newcrest revealed yesterday that it expects to boost gold output to 3.75 million ounces in the 2014 financial year, from the 2.74 million ounces produced in the year to June 2010.
According to a Reuters report that’s a lift of a third or more in the next four years.
At current prices it would be an extra $1.45 billion or more of revenue in 2014, assuming no movement in the gold price and no other disruptions.
Geoff Day, the company’s chief operating officer offshore operations, made the forecast at a conference in Sydney.
Newcrest acquired rival Lihir Gold this year which operated mainly from Lihir Island in Papua New Guinea.
In the middle of last year Mr Day told the Diggers and Dealer’s conference in Kalgoorlie that the company was looking for a 40% increase by 2013-14.
He said in a speech that the company was looking to lift output to 2.3 million ounces by 2013/14, up from 1.63 million.
Mr Day said then that Newcrest was looking for higher production from the Hidden Valley project in Papua New Guinea, the Gosowong project in Indonesia and the Ridgeway Deeps and Cadia East operations in New South Wales.
Newcrest also hopes to increase productivity at its Telfer mine in Western Australia.
That speech was a year before the Lihir deal happened.
Seeing Lihir was targeting production in 2011 of around 1 million ounces or more, the reasons for the new estimate can be seen.
Newcrest shares rose 41c or 1% to $41.50.
The shares have risen by just over 17% so far this year against a 3% fall in the local market.
Meanwhile Newcrest continues to monitor the situation in the Ivory Coast where it has suspended operations at its Bonikro mine because of continuing political unrest over the disputed Presidential election.
Bonikiro produces about 120,000 ounces of gold a year.
“Plans are in place to recommence operations as soon as possible,” Newcrest said in a statement to the ASX on Monday.
"A detailed security plan is in place and includes provision for temporary evacuation of employees should the situation deteriorate.”
The mine was acquired as part of the Lihir Gold acquisition.
